But what to do about it? My answer is actually what has been calculated above. Tax multinationals based on their stated sales in New Zealand, make them show where the difference in values occurs, instead of allowing them to charge a higher cost price for their items to New Zealand subsidiaries. Make them prove why it is different, why they make substantially more elsewhere for the same items.

Make them pay their fair share of tax on activity in New Zealand. Give us our bite of the Apple. It’s fair, isn’t it?

I agree it is fair. This old fashioned concept of paying tax on profit must be disposed of. We should demand a fair tax system. Let’s calling it a living tax – the level of tax a company should pay so that it no longer feels wretched and is helping fund a civilised society.

I think a 15% tax on revenue would be a fair living tax. Both the Herald and the Dom Post have repeatedly run stories and editorials comparing tax to turnover, not profit. So we should start the living tax campaign with them. Here’s how it would work:

APN made revenue of $857 million in 2012. So the fair living tax on them would be $129 million instead of zero

Fairfax has revenue of $2,045 million in 2013. So the fair living tax on them would be $307 million instead of zero

Fonterra had revenue of $19.8 billion in 2012. So the fair living tax on them would be $2.97 billion instead of $53 million

I think the living tax campaign should also extend to other organisations that avoid tax such as charities. They should also pay 15% of their revenue as tax.

I look forward to the left championing the living tax campaign as vigorously as they do the living wage campaign.

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This entry was posted on Sunday, February 9th, 2014 at 7:00 am and is filed under NZ Politics.
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We have a tax on revenue. It is called GST. The problem here is that internet companies claim their revenue is not in New Zealand, but occurs in a overseas jurisdiction. That is clearly a fiction. How can the NZ iTunes store not be NZ revenue?

Some companies are failing to pay an appropriate amount of tax. In the past you would receive a please explain letter from IRD if a company failed to pay tax for 3 consecutive years. It appears that this practice has ceased. A tax on revenue as this article suggests at 15 percent is higher than the genuine profit most companies make.

I have a better idea. These multi nationals are clearly ripping NZ off, so we should ban them and have the Government provide these services.

No Apple, now KiwiPhoneDevices. Will make phones like the 1998 Nokia 6310, with 25 minutes battery life. And the Government will monitor all your calls.
No Google, just KiwiSearch. The Government decides what you can read on the net.
No Facebook, just KiwiMate. And the Government will keep track of all your private life.
No Microsoft, just KiwiSoftware. Lotus 123 instead of Excel. And yes, the Government will be able to read all your documents.

We have a tax on revenue. It is called GST. The problem here is that internet companies claim their revenue is not in New Zealand, but occurs in a overseas jurisdiction

*************

Bollocks….
Go study the legislation. GST is on sales….. inputs and outputs., Companies pay GST on their inputs (materials, production costs etc) …and collect GST on their outputs (sales). Some items involving overseas transactions are Zero based – no GST either is applicable.. The net of the two is either a payment by the company/individual to the IRD or a refund from IRD.

I am, no no expert on taxation, just a simple soul with an understanding of the basics.

But even I know the living tax proposal is just as much bollocks as the Clark/Parker/Cunliffe (and Charlie Waldegrave/Susan St John living wage bullshit) turnover tax.

When the OECD throws up its hands, when the really big taxation nations of Europe and North America throw up their hands, silly people take up the case in NZ.

Well we know what we are not going to do… but what are we going to do if the tax base starts to decline rapidly after some sort of tipping point in regard to the ease and quantity of activities successfully avoiding (minimizing) tax?

In an attempt to achieve in part a fair system the tax code the State writes is very complicated. Unless you can hire a team of lawyers businesses pay a lot of tax. NZ SMEs have no chance and suffer agasinst multinationals.

This Statist moron Goldsworthy wants more tax code written which will only benefit multinationals at the expense of SMEs.

Transfer pricing this clown is talking about has been done to death.

Leftist retards like Cunnliffe need to understand multinationals like regulation because they have the economies of scale to deal with it while their small competitors struggle.

The idea of taxing turnover is not new – Greens are keen on the Tobin Tax (Currency Movement) and the EU is considering a Robin Hood Tax (currency, stocks, derivatives). Turnover tax will indeed be tabled, but the typical margins suggested are 0.25% to 1%.

Those ideas will take a while to gather steam. In the meantime, the Greens are very clear that they want to introduce Eco-Taxes, water use taxes, and set the top personal tax rate to 39% for income over $80K. such “rich prick” taxes only create reasons for the wealthy to use (legal) tax avoidance schemes, and hits the middle class who end up shouldering the burden.

The first thing I’d like to see in the tax debates is getting agreement that “rich prick” is some-one earning $500K, not $80K. That would be a positive start.

The second thing is that if the top tax rates are aligned between business profits, trust profits and personal income tax (say, 30% max) then there is much less room for tax avoidance. The lower and flatter, the better for everyone. In that environment, a RHT might work, but beware the example set by Sweden who tried a 0.5% transaction tax on share trades, half the trades/equities moved to the UK, and it raised a fraction (less than 5%) of the forecast revenue.

consumption tax is the fairest tax. Remove all income taxes and have a flat consumption tax. That would save the economy so much in tax compliance, imagine how many accountants and tax lawyers we would never need.

This observation in the GD this morning is an excellent summary of the whole tax debate… well said Red:

***” All_on_Red (794 comments) says:

February 9th, 2014 at 8:41 am

“To compel a man to furnish contributions of money for the propagation of opinions which he disbelieves and abhors is sinful and tyrannical”. Thomas Jefferson, 1779.
One of the curses of modern life is the plethora of “charitable” lobbying groups demanding that the government take more regulatory action in areas where most of us believe the state has no business interfering. ……”

DPF did a post supporting tax a while ago – it makes sure that anyone with fixed assets in NZ pays some tax – but no one on here seemed to like that.

We have to accept it’s pretty impossible to capture much from the sales of intangible assets without full international co-ordination. But we can make sure land owners in NZ, particularly non-residents, don’t get off scot free on the tax front!

On the other hand, I think it’s a huge waste of time trying to tax the off shore earnings of NZ residents – and it also discourages wealthy people from becoming NZ residents. Let them keep their overseas wealth – just tax most of their spending in NZ via GST and tax their land holdings. NZ has a huge deficit in invisibles so we could do with NZ residents with a lot invested offshore.

“…..Remove all income taxes and have a flat consumption tax…….That would save the economy so much in tax compliance, imagine how many accountants and tax lawyers we would never need….”

Good call Charlie Brown………..all these people should be in businesses contributing to ‘economic productiveness’ at all times……not doing meaningless unproductive work for the government day in and day out. They are not cost accountants or patent lawyers who actually are productive day in and day out. Unessecery government work leads to unessecery immigration where more qualified accountants are needed because we ‘don’t have enough of them’.

Immigration policy based upon ‘staff shortages’ leads to more residential land shortages……….while most accountants, lawyers, and other public servants, or government funded private sector workers in NZ – already have homes.

National talks about ‘national productivity’ but when it comes to doing what is best – getting rid of some unessecery government services completly, and the staff that go with it – they instead ‘privatise them’ – by giving the private sector the work and paying them to do the work. That is not ‘national productivity’ but a slight of hand trick. ——- accountants smudging the figures so to speak!

I don’t get the joke Farrar. You can’t tax costs of business, which is included in Revenue..
A tax on revenue , is a tax on costs of business.
Revenue from NZ less costs to operate in NZ = profit/ loss pay or claim here
You financuila very scary Farrar, read like a mad Green party idea, big self inflicted damage today.

There is no such thing as “fair tax”. Tax is legalised theft, pure and simple. I think our system is arse about face. If we truly wanted to encourage foreign investment and get the incentives right with mums and dads investing in NZ we should be rewarding businesses and investors for making a profit by not taxing them.

That’s right. If we made corporate tax zero provided the asset/capital earned a minimum return we would get a flood of offshore investors coming here. Mums/dads would steer away from rental property for the tax shelter and we would create a hot bed for products, services and jobs. Then tax them at 1% for the capital asset to stop lazy investment or land banking.

I laugh at people guessing what a “fair tax rate” is because no one knows and there is no fair tax rate. Everyone’s needs and assumptions are different. The only correct figure can be zero.

National and Labour wont entertain such a radical idea though because they are fundamentally socialist.

“…..Then tax them at 1% for the capital asset to stop lazy investment or land banking….”

Deadrightkev……..that’s what Roger Douglas more or less suggested in last year’s ‘alternative budget’ – DPF listed English’s budget, Labour’s budget response, and even Australia’s budget for commentry on KB……..but not Douglas’s!

I read Douglas’s budget on the Auckland Herald website and it is a rather sound proposition……taxing assets makes businesses more productive, and those who arn’t productive will sell the assets to those who are so as to get them off their books….so as to pay less tax…….and the buyers of the assets will already have in mind how to increase the productivity of those assets or they too will be taxed.

Once again. it seems, DPF’s heavy irony has fooled a few of his readers.

On another tack, while there is mention of “other organisations that avoid tax such as charities”, followed later (see Adolf F) by a reference to trade unions, it’s surprising that nobody has noted the tax-free status of businesses operated by Maori iwi.

Collectively they make up a sector whose growth is projected to occur at a faster rate than the general NZ economy.

“Deadrightkev……..that’s what Roger Douglas more or less suggested in last year’s ‘alternative budget’ – DPF listed English’s budget, Labour’s budget response, and even Australia’s budget for commentry on KB……..but not Douglas’s!”

Farrar gets his orders from the bland socialists up top. It just wouldn’t be good political form for National to give Douglas any credit for a clever strategy. Then they might have to risk re-election to get it over the line.

Whether DPF is being ironic or not, there is a kernel of common sense in what he says.

But, instead of taxing revenue, a more reasonable approach would be for multinationals to be taxed on an assumed profit based on their New Zealand revenue and their worldwide reported profit. So, if a company such as Apple has a global profit margin in the range of 30-40%, it should be taxed as if it made this profit on its New Zealand revenue. The only exception would be if there was something genuinely different about the company’s New Zealand operations that lowered its profit rates, such as significant capital investment.

This approach would be much fairer to New Zealand businesses that don’t have the ability to shift their profits to low tax jurisdictions.